Correlation Between Dow Jones and Dreyfus Government
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Dreyfus Government at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and Dreyfus Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Dreyfus Government Cash, you can compare the effects of market volatilities on Dow Jones and Dreyfus Government and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dow Jones with a short position of Dreyfus Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Dreyfus Government.
Diversification Opportunities for Dow Jones and Dreyfus Government
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Dreyfus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Dreyfus Government Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Government Cash and Dow Jones is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dow Jones Industrial are associated (or correlated) with Dreyfus Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Government Cash has no effect on the direction of Dow Jones i.e., Dow Jones and Dreyfus Government go up and down completely randomly.
Pair Corralation between Dow Jones and Dreyfus Government
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.78 times more return on investment than Dreyfus Government. However, Dow Jones Industrial is 1.29 times less risky than Dreyfus Government. It trades about 0.07 of its potential returns per unit of risk. Dreyfus Government Cash is currently generating about 0.03 per unit of risk. If you would invest 3,337,549 in Dow Jones Industrial on October 11, 2024 and sell it today you would earn a total of 925,971 from holding Dow Jones Industrial or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Dreyfus Government Cash
Performance |
| Timeline |
Dow Jones and Dreyfus Government Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Dreyfus Government Cash
Pair trading matchups for Dreyfus Government
Pair Trading with Dow Jones and Dreyfus Government
The main advantage of trading using opposite Dow Jones and Dreyfus Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Dreyfus Government can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dreyfus Government will offset losses from the drop in Dreyfus Government's long position.| Dow Jones vs. Thai Beverage PCL | Dow Jones vs. ServiceNow | Dow Jones vs. Loud Beverage Group | Dow Jones vs. Suntory Beverage Food |
| Dreyfus Government vs. Alpsalerian Energy Infrastructure | Dreyfus Government vs. Oil Gas Ultrasector | Dreyfus Government vs. Transamerica Mlp Energy | Dreyfus Government vs. Pimco Energy Tactical |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |